Tuesday, April 21, 2015

Market Imperialism

Forum post: David Boaz Supports Tax Choice


The vice president of Cato, David Boaz, recently wrote an article about tax choice in the Washington Post... We should get to decide how the government spends our taxes.

J.D. Tuccille, over at Reason, wrote this response... Should We Let Taxpayers Decide Where Their Money Goes?

And here's my response... John Quiggin And David Boaz Fusion Food For Thought.

I came up with a plan to implement pragmatarianism...

Right here right now I'm spending my time creating a product... this thread.  Are all of you consumers going to value this product of mine equally?  Nope.  Are any of you going to value this product at a penny or more?

In case you missed it... command economies fail because consumers aren't free to valuate products.  Right now you are free to send me a penny if that's how much you do value this thread.  But doing so really wouldn't be worth the transaction or opportunity costs.  The same would be true even if you valued this thread at a nickle or a dime or a quarter.  But if 100 people did value this thread at a quarter... then that would be $25 that should be in my pocket... but isn't.

So what if we created a market within the Ron Paul Forums?  You could use paypal to deposit money into your forum "wallet" or "bank account".  Of course the money would actually go into the forum owner's paypal account.  But your forum bank account (FBA) would be credited accordingly.  If you valued this thread at a penny... then you could click the penny button and a penny would be transferred from your FBA to my FBA.  When my FBA had enough pennies I could request a withdrawal. The forum owners would take their cut and paypal me the rest.  

Each thread would display how much you allocated to it and how much the crowd has allocated to it.  This way we could sort threads by value.

Either above or below each member's reputation would be the total amount of money that they've spent in this forum/market.

The people who create the best threads/products will of course receive the most money.  This will create a bright value signal that will attract better producers.  And when this forum has more and more valuable products... more and more consumers will sign up to participate in this forum/market.  And more and more consumers means more and more money for producers.  It's a virtuous cycle.

Sooner, rather than later, other websites are going to take notice.  When David Boaz starts posting articles here, rather than at the Washington Post (WP), then the WP is going to take notice.  When J.D. Tuccille starts posting articles here, rather than at Reason, then Reason is going to take notice.  These websites will either adapt or go extinct.  Same thing with Fee.org, Liberty.me and Mises.  Eventually The New York Times will create a market in its website. Netflix, Youtube and Spotify will follow suit.  Within a relatively short time, the only sector without a market will be the public sector.  And by then everybody will understand, more or less, the value of markets.

Check out this recent article over at Jacobin magazine... The Free-Market Fantasy.  The author, Nicole Aschoff, is an editor of the magazine.  How awesome will it be when her only option is to create a market within her website?

Here's how we're currently trying to defeat her nonsense... The Benevolent State Fantasy.

Liberals make so many stupid arguments and we spend so much time and energy trying to defeat them.  And it's not like they even bother to address our arguments.  Wouldn't it be better to simply let the market annihilate their arguments for us?  How's Nicole Aschoff going to praise the government and criticize markets when she chose to create a market within her website?  How's she going to criticize consumer valuation when consumers are determining how much money to allocate to her articles?

It's one thing for us to say that markets are so great... but it's another thing for us to actually create a market within the website where we say that markets are so great.

How much would you have to spend in this market?  That depends on the size of the free-rider problem.  If you don't believe that the free-rider problem is a real problem then you won't see any need for a yearly minimum.

Here are two economic truisms...

1. Everybody wants a free lunch
2. Incentives matter

If we create a market here.... and there's no yearly minimum... and the best thread producer only earns $1/year... then it's doubtful that David Boaz will see or respond to the value signal anytime soon. It won't be bright enough.

One way to get around the free-rider problem would be to correlate spending with advertising.  The more you spend, the more advertising you get.  Clearly this would only work for people who want to advertise something that's more or less relevant to the topics discussed here.

Right now on the homepage there's a column in the upper left hand side titled "Top Activist Efforts".  Imagine that there was a section either above it or below it that said "Top Supporters".  If I've spent the most money in this market/website, then the item at the top would look like this...

Like Tax Choice on Facebook!
Xerographica ($25,751)

Anybody who wanted this top advertising spot would know exactly how much they'd have to spend in order to get it.  Would I engage in a bidding war to try and keep this top spot?  That depends on my ROI.  The more traffic and likes the top spot generated for the tax choice facebook page... the more money that I'd be willing to spend to try and keep it.

The section title... "Top Supporters"... would contain a link to a page that listed all the supporters sorted by spending.  Each row in the table would contain the username, total amount spent and the link for the website/page that they wanted to advertise.

Of course there are other perks/benefits that could be offered to help overcome the free-rider problem.

Just how feasible is to turn this forum into a market?  It's entirely feasible.  All the necessary programming is very straightforward.  Absolutely nothing fancy would be required.  Well... maybe a bit of Ajax for when you click the penny or nickle or dime or quarter buttons.  But nothing a reasonably seasoned programmer couldn't handle.

Just because it's feasible though doesn't mean that it will be cheap.  It would take quite a few hours to modify the database and write all the code.  But it's not like all the features would have to be rolled out at once.  In order to have a basically functional system you'd need to...

  • Add the FBA column and total spending column to the members table
  • Add the total allocation column to the threads table
  • Create a table to keep track of how much each member has allocated to each thread
  • Add the coin buttons to the thread
  • Write the code to update the database accordingly
  • Write the code to hide/disable the coin buttons if a member's broke
  • Write the code to display FBA balance
  • Write the code to display the individual and total allocation for each thread

And that's it?  I'm sure that I'm forgetting a few steps.

With this very basically functional system... the forum owners would have to manually update your FBA when you paypal'd them some money.  Which would only be a lot of work if a lot of people sent them money.  If nobody paypals them any money then clearly they wouldn't want to allocate any more time/money to developing a system that there's zero demand for.  So the greater the demand, the greater the justification/rationale/incentive/funding for making further improvements.

And obviously I have no idea if this is something that the forum owners would even be interested in trying.  Heck, I don't even know who the forum owners are.

Let me know if you like this idea.  I'm not a mind reader!  Better yet, let me know how much money you'd allocate to this thread if it was stupid easy to do so.  Don't forget that you might just get the chance to put your money where your mouth is.  And if you don't like this idea... then please show your work.

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